Help to buy ISA vs lifetime ISA – should I transfer?
If you're saving for your first home with a help to buy ISA, find out if transferring to a lifetime ISA might be a better option for you.
Help to buy ISAs and lifetime ISAs both come with a 25% bonus on your savings – but there are some important differences between the two.
Help to Buy ISA
The Help to Buy ISA is closed to new applicants, but if you already have a Help to Buy ISA you can still put in up to £200 each month until November 2029.
You can save up to £12,000 in a Help to Buy ISA and get a 25% government bonus (up to £3,000) when you use the money to buy your first home. This bonus is paid when the house purchase has completed, which means you can't use the bonus for your deposit.
The property must be worth £250,000 or less if it's outside London, or up to £450,000 in London for you to get the 25% bonus.
You have to claim the government bonus by December 2030.
Lifetime ISA
You can still open a lifetime ISA if you're a UK resident aged between 18 and 39. You can pay into the account until you reach the age of 50.
With a lifetime ISA, you can save up to £4,000 each year and the government will add 25% of however much you put in (up to £1,000 a year). The bonus is applied monthly - find out how much you could earn with our free lifetime ISA calculator.
If you take your money out for anything other than buying your first home (or if you've turned 60), you'll be charged a withdrawal penalty fee so you should be sure that this is what you'll use the money for before you open the account.
Unlike the Help to Buy ISA, you can use the bonus for your house deposit for a property worth £450,000 or less regardless of where it is in the UK.
It must be the first property you've bought and the lifetime ISA has to be have been open for a year before you can use it.
Find out more about lifetime ISAs here: What is a lifetime ISA?
Summary of differences
| Lifetime ISA | Help to Buy ISA |
|---|---|
| Pay in up to £4,000 each tax year | Pay in up to £12,000 in total |
| Must be aged 18 - 39 to transfer or open | You can't open a new Help to Buy ISA |
| Get the bonus monthly - can use it towards your deposit | Get the bonus after you buy your home - too late to use for deposit |
| Property must cost £450,000 or under | Property must cost £250,000 or under (£450,000 if in London) |
| Available in either cash (earns interest) of stocks and shares (invested on your behalf) | Only available as cash (earns interest and isn't invested) |
You can't receive the government bonus on both
While you can have both a lifetime ISA and a Help to Buy ISA, you can only receive a government bonus on one of them.
What to consider before transferring your savings from a help to buy ISA into a lifetime ISA
- The price of the property.
If you're planning on buying a property worth more than £250,000 (outside of London) then you'll only be able to get the government bonus on a lifetime ISA. If you're buying in London, the limit on both is £450,000. - How much you want to save and how quickly.
Lifetime ISAs allow you to save up to £4,000 a year with no overall limit - but you can't pay any money in after you reach 50. With Help to Buy ISAs, you can save up to £12,000 in total over any time period. Bear in mind that you need to save at least £1,600 in your Help to Buy ISA to get the government bonus. - When you want to buy.
You'll only get the bonus on a lifetime ISA if you keep your money invested for at least a year. - Whether you want to use the government bonus towards your deposit or not.
With a Help to Buy ISA, you won't get the bonus until after you complete your house purchase, but with a lifetime ISA the bonus is added to your account each month you pay money in. - Your age.
You have to be under 40 to open a lifetime ISA and you won't be able to pay any money in after your reach 50. - How much risk you want to take with your money.
Help to Buy ISAs are cash ISAs, meaning the money grows by earning interest like a current account. Lifetime ISAs, on the other hand, are available as either cash ISAs or stocks and shares ISAs. If you move your money from a Help to Buy ISA into a stocks and shares lifetime ISA, your savings will be invested in the stock market and while this could mean you end up with more money, there is also a risk the value could go down.
Annual lifetime ISA limits
It's worth bearing in mind that if you do move your savings into a lifetime ISA, you can only move up to £4,000 a year, minus any other lifetime ISA contributions.
Lifetime ISA
Open or transfer to a OneFamily Stocks and Shares Lifetime ISA and get a 25% bonus to help you buy your first home.
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